TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1036
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....red by the appellant in respect of purchases from two parties i.e. BPT Tube Corporation and National Sales Corporation. 2. The learned CIT (Al erred in not understanding business of assessee before making such a huge addition. 3. The learned CIT (Al erred in law and/or facts in not considering the submissions and explanations filed by the assessee during the appeal proceedings before passing the order. 4. The learned Assessing Officer erred in not following Article 227 of The Constitution Of India 1949, which states the High Courts have superintendence over all courts and tribunals throughout its territories which means the decision of high court is binding on all lower authority within its territories which, inter alia, includes Income Tax Officers etc. 3. Brief facts of the case are that the assessee is an individual engaged in business as dealers in M.S. Pipe and Structures and runs a proprietary concern under the name and style of M/s Vaishnavi Enterprises. 4. At the outset, we find that this appeal is filed by the assessee late by 54 days, beyond the period stipulated u/s 253(3) of 1961 Act for filing an appeal before the tribunal. The assessee has duly filed an affidavit....
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.... sad incident in the family of his brother leaving the country leaving behind his wife and children, father of the assessee also died on 2nd December, 2015 due to the shock of leaving of his one son country leaving his son's wife and their children. The assessee has contended that these events shattered and disturbed his normal family and business life, which in our considered view is a sufficient cause which prevented the assessee for filing appeal in time before the tribunal as stipulated u/s 253(3) of 1961 Act being a genuine cause for delay in filing appeal and under these circumstances keeping in view substantial interest of justice vis-à-vis technicalities , we are inclined to condone delay of 54 days in filing this appeal with the tribunal by the assessee late beyond the time stipulated u/s 253(3) of 1961 Act in the interest of justice. Thus, we admit this appeal and proceed to decide this appeal on merits. We order accordingly. 7. During the relevant previous year under consideration, the assessee had reported sales of Rs. 4.90 crores and purchases of Rs. 4.61 crores, in his proprietory concern M/s Vaishnavi Enterprises. During the course of scrutiny assessment proc....
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....ld not prove the delivery of the material said to have been purchased from these parties. The AO observed that delivery documents for the material especially the transportation receipt were not produced. The AO observed that assessee has not come out with details from where the material has been purchased and the purchases were held by the AO to be not genuine. The A.O. made additions to the tune of Rs. 28,57,208/- as unexplained expenditure u/s 69C of 1961 Act by holding the same to be deemed income of the assessee u/s 69C of 1961 Act, by working out disallowance based on peak calculation of purchases , of which details are provided by the AO as per working chart at page 11 of the assessment order dated 28-03-2013 passed by the AO u/s 143(3) of 1961 Act. 8. Aggrieved by the assessment order dated 28-03-2013 passed by the AO u/s 143(3) of 1961 Act, the assessee filed first appeal before learned CIT(A). 9. In appeal before learned CIT(A), the assessee contended that these four parties were listed as suspicious dealers by Maharashtra VAT authorities. The Maharashtra VAT authorities have recorded statement of these four parties whereby they confessed that they have not done any busi....
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....as Hawala dealers and has subsequently forwarded the information to the Income-tax department that the assessee is one of the beneficiaries . Thus, onus is very heavy on the assessee to prove with infallible evidence that the purchases are genuine and material was actually received by the assessee from these parties. No evidence is produced by the assessee that the material as to quantity and quality as stipulated in invoices from these four parties were actually received by the assessee. There are no vehicle numbers in the invoices to prove delivery of material. The documents such as Purchase order, transportation bill, octroi receipt, goods receipt note were not submitted by the assesse. It was observed by the learned CIT(A) that A.O. has held that the parties from whom the purchases were made by the assessee was found to be bogus and non-existent . The AO also observed that the assessee purchased the goods from other parties in cash but not from these four non-existent parties , as sales were shown by the assessee against purchases on which income was offered for taxation. The motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress t....
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....available on their known addresses as mentioned in their invoices. It was submitted that all details were submitted. It was submitted that the ld. CIT(A) erred in estimating GP @ 17.5% on purchases from these parties. The learned counsel for the assessee submitted that stock register could not be produced as the material has been purchased on 'Kg.' basis while sold in pieces, feet or kg in small quantities and it was not possible to reconcile the stock. It was submitted that GP rate of 7.11% was declared in the books of account. The ld. CIT(A) erred in estimating GP @ 17.5% on purchases from these parties. The ld. Counsel submitted that last four years GP ratio's are as under:- Asst. year Sales Purchase Gross Profit GP% 2007-08 15347933 15280241 1214130 7.91 2008-09 25904000 28720381 1790221 6.91 2009-10 33736536 31002944 2417746 7.17 2010-11 49026761 46123112 3486031 7.11 The ld. Counsel submitted that ld. CIT(A) erred in applying GP ratio at 17.5% on purchases from these parties. It is submitted that in Iron & Steel Industry, the profitability ratios for the four quarter for previous year 2009-10 is as under(Ref csimarket.com relied upon by the a....
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....e nature of merely accommodation entries , of which the assessee was also beneficiary. The AO asked the assessee to produce these four parties wherein the assessee could not produce three parties except Bharat Forge who appeared before the AO at the behest of the assessee. The assessee had contended that payments were made by account payee cheque, however, the assessee could not produce stock register and consumption of material details etc. , while sample copies of purchase bills were produced . The assessee contended that the material has been purchased on kg. basis while the same is sold in pieces, feet or kgs in small quantities and it was submitted that it is not possible to quantitatively reconcile the same. The stock register was also not produced . The assessee has not maintained stock records, delivery challans, goods received notes , octroi receipt , lorry numbers etc to substantiate the genuineness of the purchases to prove that there was actual delivery of material to the assessee , more so in light of incriminating statements of these alleged bogus entry providers. The AO brought to tax income computed by way of peak calculation of purchases by considering the three pa....
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....d u/s 133(6) of 1961 had returned un-served as these parties do not exist on the addresses given by them. The assessee could not produce stock register and also could not prove actual delivery of material being purchased from these hawala dealers as octroi receipts, goods receipt note, lorry receipts, purchase orders could not be produced nor invoices had any details of movement of goods to assessee from the alleged hawala dealers,, however, the assessee did produced the sample copies of purchase invoices and also submitted that payments were made by account payee cheque . Under the factual matrix of the case , we have observed that the learned CIT(A) rightly held that profit embedded in these purchases are to be estimated wherein the learned CIT(A) estimated GP @ 17.5% on alleged bogus purchases as against 7.11% declared by the assessee. We are in principle agreeable with the approach of learned CIT(A) that profits are to be estimated as embedded in these alleged bogus purchases which view is consistent with the view of Hon'ble Gujarat High court in the case of CIT v. Simit Sheth(supra) . Similar view was taken by Mumbai-tribunal in the case of Sh. Ashwin Purshottam Bajaj v. ITO i....
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....ases with quantitative details of stock as per sale invoices. The A.O. has doubted the purchases from these four alleged accommodation entry providers being hawala dealers as concluded by Sales Tax Department of Government of Maharashtra to be bogus purchases, that these four parties only provided accommodation bills and the goods were never supplied by these parties and the assessee allegedly made purchases from some other parties for which payments were made through undisclosed income. Thus, the A.O. observed that the assessee has purchased the material from someone else while bogus bills were organized by these hawala dealers, hence, section 69C of the Act was invoked by the AO and additions were made by the AO. The conclusion of the ld. CIT(A) that the assessee has purchased material from some other dealers but quantitative reconciliation of the stock was duly done by the assessee of the sale and purchase and hence the profit element in this accommodation entries are to be added to the income cannot be faulted . The ld. CIT(A) restricted the addition by estimating GP ratio of 12.5% of Rs. 1,13,44,778/- being purchases from these alleged four accommodation entry providers. We do....